Carpenter v Morris

These proceedings arise out of a partnership between the second plaintiff and the fourth defendant during the period from September 1996 to August 2003 and subsequent agreements that the plaintiffs claim to have entered into with the first defendant.

In relation to the partnership, the second plaintiff alleges that certain monies paid to the first defendant were partnership moneys to which the second plaintiff and the fourth defendant were equally entitled. The second plaintiff seeks an order that the first defendant pay 50 per cent of those moneys to the second plaintiff as money had and received by the first defendant to the use of the second plaintiff. The second plaintiff also seeks an order for the taking of accounts of the partnership.

In relation to the alleged subsequent agreements, the plaintiffs claim damages against the first defendant for alleged repudiation of those agreements. Alternatively, the plaintiffs claim damages for alleged breach of one of those agreements by the first defendant and damages in conversion against the sixth defendant.

For the reasons that follow, the plaintiffs’ claims fail.

The Grandee Quarry is located at Mulyandry (near Forbes) in New South Wales.

The rock mined at the Grandee Quarry is a type of basalt known as gabbro. Gabbro is a shiny black rock, which is cut and polished and is used for purposes such as making kitchen benches, headstones, decorating public buildings and landscaping. [1] It is also referred to as dimension stone and granite.

The gabbro mined at the Grandee Quarry generally falls into two categories, described by the parties as first grade rock and second grade rock. First grade rock is uniformly black in colour, with no quartz veins, other impurities or colour variations. Second grade rock has the same composition, structure and hardness as first grade rock, but contains some veins of quartz or other minerals of a different colour. [2]

The gabbro mined at Grandee Quarry is marketed under the trade name “Grandee Granite”. [3]

In the market into which Grandee Granite was sold, there was generally greater demand for first grade rock than for second grade rock at all times material to this proceeding. At some times, there was no demand for second grade rock at all. [4]

Mr Jimmie Carpenter is the first plaintiff. He describes himself as the controller of the second plaintiff, Tastex Pty Ltd (Tastex). Mr Carpenter first began work at the Grandee Quarry in 1984. Relevantly to these proceedings, Tastex extracted granite from the Grandee Quarry during the period from about September 1996 to August 2003 and also during the period from August 2003 until about December 2014.

During the September 1996 to August 2003 period, this work was undertaken for a business conducted by Tastex in partnership with the fourth defendant. The fourth defendant is now called Central West Granite Pty Ltd, but was known as CG & JR Morris Pty Ltd until late 1999. I will refer to the fourth defendant as Central West. I will refer to the partnership between Tastex and Central West as the Morris Carpenter Partnership.

At the time the Morris Carpenter Partnership commenced in September 1996, Mr Colin Morris and Mr John Morris were the directors of Central West. [5] The first defendant, Mr Colin Morris is currently the sole director of that company. As several defendants in this proceeding have the surname Morris, I will refer to them by their first names to avoid confusion. Applying the same convention, I will refer to Mr Carpenter by his first name, Jimmie. No disrespect is intended.

It is common ground that the Morris Carpenter Partnership came to an end in August 2003. Tastex continued to undertake quarrying work at the Grandee Quarry after the partnership ended until about December 2014. The terms of the agreement pursuant to which they did so is one of the issues in dispute in these proceedings. Those activities ceased in about January 2015 when Jimmie and Colin became aware that, as a result of legislative changes to the Mining Act 1992 (NSW) that had commenced on 15 November 2010, the quarrying operations at the Grandee Quarry had been unlawful since 15 November 2011.

Mr Damian Morris is the fifth defendant and a director of the sixth defendant, Marble Craft & Granite Supplies Pty Ltd (Marble Craft). Marble Craft was granted exploration licence no. EL8371 in relation to the land comprising the Grandee Quarry on 20 May 2015. [6]

Grandee Quarries Australia Pty Ltd (GQ Australia) is the seventh defendant. It was incorporated on 29 June 2015. Colin and Damian are the directors and shareholders of GQ Australia. [7]

GQ Australia has applied for a mining lease in respect of the minerals in the land comprising the Grandee Quarry. As at the date of the hearing, no mining lease had been granted.

The Grandee Quarry is situated on two adjacent parcels of land, referred to in these proceedings as Lot 31 and Lot 134. The history of the ownership of these lands, and mining leases in respect of these lands, is referred to in more detail below. Lot 31 is presently owned by Colin (as to 50 per cent), Kathryn Morris (Kathryn) (as to 25 per cent) and Alison Morris (Alison) (as to 25 per cent), as tenants in common. Lot 134 is presently owned by a Mr and Mrs Dunkley, who purchased it from Kathryn and Alison in 2017. Mr and Mrs Dunkley are the eighth and ninth defendants.

In the course of the quarrying activities undertaken by the Morris Carpenter Partnership during the September 1996 to August 2003 period, and by Tastex and Jimmie during the August 2003 to December 2014 period, granite boulders, overburden and other material extracted from the land or disturbed during quarrying operations was piled onto Lot 31 and Lot 134. This had also occurred during quarrying activities at the Grandee Quarry prior to the commencement of the Morris Carpenter Partnership in mid-1996.

The matters in dispute in these proceedings include issues relating to material that the plaintiffs contend was accumulated on Lots 31 and 134 during the Morris Carpenter Partnership (referred to by the plaintiffs as the 2003 stockpile) and in the period from mid-2003 to the end of 2014 (referred to by the plaintiffs as the 2014 stockpile). The area that the plaintiffs identify as the 2003 stockpile covers a large part of the surface of Lot 31 and Lot 134. The area that the plaintiffs identify as the 2014 stockpile covers a larger part of the surface of both lots. Between them, the 2003 stockpile and 2014 stockpile cover the whole of those parts of Lot 31 and Lot 134 that were used for quarrying operations (as opposed to agricultural or other purposes). It is convenient to adopt the plaintiffs’ terminology in these reasons, although I acknowledge that there are disputes about whether the 2003 stockpile is comprised exclusively of material extracted during the Morris Carpenter Partnership and whether the 2014 stockpile is comprised exclusively of material extracted by Tastex and Jimmie in the August 2003 to December 2014 period. There is also a dispute about whether the 2003 and 2014 stockpiles are now part of the land.

Mr and Mrs Dunkley, as the owners of Lot 134, have disclaimed any interest in material accumulated on Lot 134. They did not seek to be heard in the proceedings, save in relation to the terms of any order that may be made for the removal of any stockpiled material from Lot 134 and in relation to costs. [8]

Kathryn and Alison no longer own Lot 134 and do not claim to have any interest in any part of the 2003 stockpile and 2014 stockpile on Lot 134. However, they claim to each have a 25 per cent interest in the parts of those stockpiles that are located on Lot 31 on the basis that they each have a 25 per cent interest in the legal title to Lot 31. [9]

Kathryn and Alison were the second and third defendants in these proceedings, but the plaintiffs reached a settlement with them on the morning of the first day of the hearing and a notice of discontinuance against Kathryn and Alison was subsequently filed. As a result of the discontinuance of their claims against Kathryn and Alison and certain amendments made during the course of the hearing, the plaintiffs sought no proprietary relief in respect of the 2003 and 2014 stockpiles.

The adjacent parcels of land on which the Grandee Quarry is located are: [10]

Prior to 1 June 1994, Lot 31 and Lot 134 were owned by a Mr Peter Sherritt.

On 16 February 1988, Mr Sherritt (as lessor) entered into:

Each lease was registered, but was only recorded on the folio of the register for Lot 134. [15] It appears that this is likely to have been an error when the titles were converted from the Volume and Folio references to the Folio Identifiers in about December 1988. In these proceedings, nothing turns on the failure to record the leases on the folio of the register for Lot 31. No party suggested that the leases were not enforceable at all relevant times until 15 November 2011 in respect of the whole of the land comprising the Grandee Quarry.

It is common ground that, at the time the leases were entered into, the owner of the freehold title to the land was entitled to privately mine the gabbro or authorise someone else to do so. The parties refer to the leases as private mining agreements, and I will adopt the same terminology in these reasons. It is convenient to refer to the lease for the period from 1 January 1987 to 31 December 1997 as the first private mining agreement and the lease for the period from 1 January 1998 to 31 December 2012 as the second private mining agreement.

A solicitor’s letter dated 12 September 1997 referred to leases in respect of Lot 31 and Lot 134 in favour of Colin and John as joint tenants for a further term from 1 January 2013 to 31 December 2038. [16] However, copies of those leases were not in evidence and there is no evidence that they were registered.

The first and second private mining agreements included the following clauses: [17]

Each private mining agreement obliged the lessee to pay royalties and rent to the lessor. The royalty rate per cubic metre mined was the subject of annual review by reference to increases in the Consumer Price Index. [18]

Each private mining agreement required the lessee to deliver up the land at the end of the term restored to its condition at the commencement of the lease. If the lessee failed to do so, the lessor was entitled carry out the work necessary to do so and the cost of that work was a debt due by the lessee to the lessor, payable on demand. [19]

Each private mining agreement contained a covenant by the lessee not to assign, transfer, demise, sublet or part with the possession of the land or any part thereof without the lessor’s written consent, which was not to be refused in the case of a proposed respectable and responsible assignee, tenant or occupier. [20]

On 1 June 1994, Colin and John each purchased Lot 31 as tenants in common in equal shares and John purchased the whole of Lot 134 from Mr Sherritt. The transfers were subject to the registered first private mining agreement then on foot and the registered second private mining agreement commencing on 1 January 1998. [21]

Thus, at the commencement of the Morris Carpenter Partnership in September 1996, Lot 31 was owned by Colin and John as tenants in common in equal shares and Lot 134 was owned solely by John, whilst Alison, Kathryn and John, as joint tenants, had the leasehold interest in the minerals in both lots. [22] Under the first private mining agreement, Alison, Kathryn and John were entitled to quarry, remove and sell the granite and were required to pay an annual rent plus royalties to Colin and John as the owners of Lot 31 and to John as the owner of Lot 134. The rate of royalty per cubic metre mined was the subject of annual review by reference to increases in the Consumer Price Index.

John passed away in September 1997. Lot 134 and his half share of Lot 31 were transferred to Kathryn as the executor of his estate, and subsequently to Kathryn and Alison as the beneficiaries under his last will. The transfers were not registered until August 2008. [23] It was not suggested that the delay in registration was relevant to any issue in dispute in these proceedings.

According to Jimmie, the death of John did not result in any change to the manner in which the Morris Carpenter Partnership business was conducted on Lots 31 and 134. [24]

The legal position from John’s death in September 1997 until the end of the term of the first private mining agreement on 31 December 1997 was that:

On the commencement of the second private mining agreement on 1 January 1998, the leasehold interest in the minerals in both lots was held solely by Colin, as John’s interest in the second private mining agreement as joint tenant with Colin had passed to Colin on John’s death. That private mining agreement entitled Colin to quarry, remove and sell the granite and required him to pay annual rent plus royalties to:

That position continued until the Morris Carpenter Partnership came to an end in August 2003.

As I have referred to above, Jimmie and Tastex continued to quarry granite at the Grandee Quarry from the end of the Morris Carpenter Partnership in August 2003 until about December 2014. During that period, the only changes to the land ownership and lease arrangements were that:

It is not clear whether a third private mining agreement applied with effect from 1 January 2013. [25] In any event, amendments to the Mining Act that were introduced by the Mining Amendment Act 2008 (NSW) rendered quarrying activities on the Grandee Quarry unlawful from 15 November 2011 without a mining lease granted by the State. [26] It was the discovery of these legislative changes that caused the parties to cease quarrying operations on the Grandee Quarry at the end of 2014.

Section 11 of the Mining Act provides:

The term “stockpile” is not defined in the Mining Act.

It is relevant to note that sub-sections (1) and (2) apply to “any mineral that is lawfully mined”, whereas sub-section (3) applies only to “any mineral that has been mined pursuant to a mining lease or mineral claim”.

A “mining lease” is defined as a mining lease granted under Part 5 of the Mining Act, including a consolidated mining lease. Part 5 provides for the granting of mining leases by the State, rather than by private landowners who own minerals within their land.

A “mineral claim” is defined as a mineral claim granted under Part 9 of the Mining Act, which provides for the State to grant rights to prospect for specific minerals.

The private mining agreements that are relevant to these proceedings are not mining leases or mineral claims within the meaning of s 11(3) of the Mining Act.

Section 11 has not been amended since the commencement of the Mining Act. It has applied in the terms set out above at all times relevant to these proceedings. The definitions and other provisions referred to above have not been amended in a manner that is relevant to these proceedings.

It is common ground that, during the period from about 1996 until about mid-2003, the Morris Carpenter Partnership conducted the business of mining, cutting, and shaping granite at the Grandee Quarry. The plaintiffs contend, and Central West disputes, that the partnership business also extended to the marketing and sale of that granite. [27]

The partnership agreement between Tastex and Central West provided that the partners in the Morris Carpenter Partnership were required to share expenses equally and entitled to share profits equally. [28] However, by reason of the dispute about the scope of the partnership business, there is a dispute about whether the proceeds of sale of that granite was partnership income, or whether the partnership income was limited to a fee paid to the partnership for extracting the granite and cleaning and shaping it in preparation for sale.

Grandee Granite was marketed and sold by Mrs Bernice Huggard of W M Ashcroft & Co Pty Limited. The evidence does not reveal any person other than Mrs Huggard who was involved in the business of W M Ashcroft & Co Pty Limited at relevant times. I will therefore simply refer to Mrs Huggard, unless it is necessary to distinguish between her and W M Ashcroft & Co Pty Limited.

The proceeds of sale of granite mined from the Grandee Quarry during each month of the Morris Carpenter Partnership were distributed as follows:

It is only the additional monthly payments that are the subject of dispute in these proceedings. In relation to those payments, the plaintiffs allege that: [34]

The only relief sought by the plaintiffs in relation to the additional monthly payments is an order requiring Colin to repay 50 per cent of the additional monthly payments to Tastex as money had and received. [35]

The plaintiffs submitted that Central West is “equally liable” in respect of the additional monthly payments under s 29 of the Partnership Act 1892 (NSW). [36] That section requires each partner to account to the firm for any benefit derived by the partner without the consent of the other partners from any transaction concerning the partnership or for any use by the partner of partnership property. I did not understand this submission as raising a claim or cause of action in addition to the claim for the taking of accounts of the Morris Carpenter Partnership, to which I refer below. No such additional claim or cause of action was pleaded.

Despite the numerous amendments made to the pleadings by all parties during the course of the final hearing, the plaintiffs did not plead any claim for relief against Central West for its alleged breach of fiduciary duty in allegedly causing or permitting the additional monthly payments to be made to Colin and did not plead any claim for relief against Colin under the first or second limb of Barnes v Addy. In oral closing submissions, senior counsel for the plaintiffs abandoned a submission that Colin was liable under Barnes v Addy as a constructive trustee. [37]

Colin acknowledges that he received the additional monthly payments but denies that the money out of which the payments were made was partnership income or that his receipt of those payments was wrongful. [38]

Colin contends that: [39]

Colin gave evidence that Mrs Huggard had been marketing and selling granite from the Grandee Quarry since about the 1960s when Colin’s father exercised the mining rights. Colin’s evidence was to the effect that, during the Morris Carpenter Partnership, he had simply continued the arrangements with Mrs Huggard that his father had implemented many years earlier and that Colin had continued in the years prior to the partnership. These arrangements involved Mrs Huggard conducting “overall financial management of the quarry” and distributing the sale proceeds of the granite to W M Ashcroft & Co (sales commission and the royalty referred to above), to members of the Morris family (royalties payable to them as owners or part owners of Lot 31 and Lot 134) and “a payment to the quarry master for recovering the granite”. [40]

There is no dispute that the Morris Carpenter Partnership came to an end in about August 2003. Tastex claims that no account was taken of the partnership assets and liabilities or to formally wind up the affairs of the partnership. [41] This is disputed by Central West. Central West claims that there was a settled account, and that Tastex’s former solicitor made an admission with authority on 12 August 2019 that there was a settled account. [42]

Tastex claims: [43]

Central West opposes a declaration that the Morris Carpenter Partnership is dissolved on the basis that there is no purpose to be served by making such a declaration in circumstances where there is no dispute that the partnership came to an end in August 2003. [44]

Central West opposes an order for the taking of accounts on two grounds:

Tastex contends that the limitation defence should be rejected on the basis of alleged fraudulent concealment of the additional monthly payments. [47] Colin and Central West deny that the additional monthly payments were fraudulent or were fraudulently concealed.

Tastex contends that the defence of settled accounts is not available because there has not been a settlement of all accounts between the partners in that “there are two assets which have not been settled. That is the 2003 stockpile and the right to mine”. [48] The “right to mine” refers to a right that Colin claims that he and John contributed to the Morris Carpenter Partnership. It will be necessary to say something further about the nature of this contribution later in these reasons.

Central West accepts that all accounts must have been settled in order for the defence of settled accounts to apply. However, it denies that the right to mine was an asset of the Morris Carpenter Partnership and contends that the 2003 stockpile is no longer an asset separate from the land on which it is situated. Alternatively, if the 2003 stockpile is not found to be part of the land, Central West contends that an order for the taking of accounts would be futile because it is not possible to quantify or value the 2003 stockpile. [49]

The plaintiffs plead that they entered into an oral agreement with Colin in or about July 2003, the terms of which were to the following effect: [50]

It is convenient to refer to this alleged agreement as the Quarrying Agreement. [51]

The plaintiffs allege that they entered into a further agreement with Colin in about July 2003 to the effect that the plaintiffs, at their own expense, would expose more of the gabbro deposit in the Grandee Quarry for future mining, in consideration for Colin retaining the plaintiffs for reward to mine, cut, shape and prepare for sale all of the remaining gabbro deposit in the Grandee Quarry. [52] The plaintiffs contend that this further agreement included an implied term that Colin do all acts and things necessary on his part to enable the plaintiffs and Colin to perform their obligations under the agreement. [53] It is convenient to refer to this alleged further agreement as the Future Mining Agreement.

In the alternative, the plaintiffs pleaded that Colin requested them to expose gabbro for future mining at their own expense. However, the alleged request is not relevant to the claims for relief ultimately pressed by the plaintiffs in closing submissions. [54] It is therefore not necessary to determine whether the alleged request was made (which Colin denied) or whether Tastex carried out work in response to it (which Colin also denied).

The plaintiffs claim that, during the September 2003 to December 2014 period, they carried out work in accordance with the alleged Quarrying Agreement by mining, cutting, shaping and making ready for sale quantities of first grade dimension stone to fill customers’ orders, and by mining and stockpiling quantities of second grade dimension stone and boulders (this is what the plaintiffs refer to as the 2014 stockpile). [55]

The plaintiffs acknowledged in their pleading that Colin had honoured the Quarrying Agreement during this period “insofar as [he] paid the Plaintiffs a portion of the dimension stone sale proceeds for sales of First Grade dimension stone as agreed between [Jimmie and Colin].” [56] However, they claim damages for Colin’s alleged breaches of the Quarrying Agreement in failing to make any payment to them in respect of certain specific sales of which they say they were not aware prior to these proceedings. The relevant sales were made in 2016 and the damages claimed are in the amount of $17,850 (plus interest). [57]

The plaintiffs also claim damages of $5,550 (plus interest) in respect of sales made by Marble Craft from the 2014 stockpile in respect of which the plaintiffs say they did not receive the payment to which they were entitled under the Quarrying Agreement. This claim was made in conversion. Marble Craft is not alleged to be a party to the alleged Quarrying Agreement. [58]

Finally, the plaintiffs contend that Colin has repudiated the Quarrying Agreement because he is not ready, willing or able to perform his obligation “to sell the 2014 stockpile” due to his lack of legal authority to sell the 2014 stockpile since November 2011 without the permission of Kathryn and Alison (to the extent that the stockpile is located on Lot 31) and Mr and Mrs Dunkley (to the extent that the stockpile is located on Lot 134). The plaintiffs allege that Colin has taken no steps to obtain that permission, which they say is required because the ownership in the 2014 stockpile reverted to the landowners in November 2011 when quarrying at the Grandee Quarry became unlawful by reason of the amendments to the Mining Act referred to at [42]-[48] above. The plaintiffs’ contentions appear to be based on an assumption that s 11(3) of the Mining Act applied. For the reasons explained at [44]-[47] above, s 11(3) did not apply. It will be necessary to return to these issues later in these reasons.

The plaintiffs say that they accepted Colin’s alleged repudiation of the Quarrying Agreement by commencing these proceedings. [59] They claim damages assessed by reference to what they say is the value of the 2014 stockpile. The amount of damages claimed is in the order of $1,200,000 plus interest. [60] The plaintiffs accept that, if they succeed on this claim, they will not be entitled to damages for the alleged breaches of contract and conversion referred at [72]-[73] above.

The plaintiffs allege that Colin repudiated the Future Mining Agreement by terminating it in early 2015 on the basis that “the mining license has expired”. [61] The plaintiffs claim damages assessed by reference to what they say is the volume and value of first and second grade dimension stone yet to be mined at the Grandee Quarry. The amount of damages claimed is approximately $4,500,000 (including interest up to the date of the hearing). [62]

Colin denies that he entered into the Quarrying Agreement or the Future Mining Agreement. [63] He says that he did enter into an agreement with the plaintiffs after the Morris Carpenter Partnership came to an end, but contends that the agreement was simply that the plaintiffs would mine, cut, shape and prepare dimension stone for sale for a cubic metre rate to be agreed between the plaintiffs and Mrs Huggard and payable at the time of sale of the dimension stone. [64]

Colin denies the plaintiffs’ allegations of breach of the alleged Quarrying Agreement. He acknowledges that the plaintiffs worked to fill orders for dimension stone during the period from 2003 to 2014 in accordance with the agreement that he says they entered into in 2003. [65] He admits that the plaintiffs were paid a portion of the sale proceeds of first grade dimension stone during that period and relies on the plaintiffs’ pleading concerning these payments as an admission that no monies are owing to the plaintiffs in respect of dealings prior to December 2014. [66]

Colin also denies the alleged repudiation of the Quarrying Agreement. He says that the agreement that he made with the plaintiffs in 2003 came to an end in 2014 by reason of the legislative changes that obliged him to require the plaintiffs to cease quarrying operations. On Colin’s case, that agreement did not concern the sale of any stockpiled second grade material in any event. [67] Colin also disputes the plaintiffs’ contentions concerning the volume and value of dimension stone in the 2014 stockpile.

In addition to denying the existence of the alleged Future Mining Agreement, Colin disputes the plaintiffs’ contentions concerning the volume and value of dimension stone yet to be mined at the Grandee Quarry.

Finally, Colin also relies on s 14 of the Limitation Act in relation his defence to the plaintiffs’ claims for damages for the alleged repudiation of the Quarrying Agreement and the Future Mining Agreement.

I note for completeness that, in the plaintiffs’ closing submissions, no claims for relief were pressed against Damian and GQ Australia and that the claim pressed against Marble Craft was limited to the claim for $5,500 referred to at [73] above. The allegations in paragraphs 13A to 13F and paragraphs 22 to 26 and the claims for damages in conversion or equitable damages in paragraph 26H of the Third Further Amended Statement of Claim were abandoned, save for the $5,500 claim against Marble Craft.

In summary, the plaintiffs’ claims to be determined are:

The plaintiffs abandoned all other pleaded causes of action in closing submissions.

Much of the evidence relied on by the parties was repetitive, and the evidence of each of Jimmie and Colin suffered from various internal inconsistencies. In those circumstances, I required the parties to prepare written closing submissions identifying with precision the findings for which they contended and the evidence relied on in support of those contentions. The following summary of evidence is therefore drawn primarily from the evidence identified in the parties’ closing submissions.

The Grandee Quarry has been in operation since the early 1960s. [68]

There is no dispute about the process by which granite was extracted at the Grandee Quarry before, during and after the Morris Carpenter Partnership. The gabbro deposit is covered by dirt, shrubs and large trees. An excavator is used to remove trees and vegetation in an area within the quarry identified for mining, and then to scrape away and remove large volumes of earth, loose gabbro boulders of various sizes and loose weathered gabbro overburden and weathered surface rock. Once the rock below the overburden is exposed, blocks are extracted from the gabbro deposit and then cut into dimension. During the cutting process, imperfections such as cracking or a white vein are often encountered in the block. When this occurs, the imperfect rocks or parts of the block (i.e. second grade rock) are ordinarily discarded or moved to another part of the quarry. When the whole of an outcrop of the gabbro deposit has been converted into dimension stone blocks, the process begins all over again in a new location within the quarry. As will be apparent from this description, the quarrying process involves the accumulation of large amounts of rock, boulders, unusable material and offcuts. Some of that material can be sold, although most sales during the periods relevant to these proceedings were of first grade rock. [69]

Dr Hans-Dieter Hensel, an expert witness called by the plaintiffs, gave this evidence in relation to the process of quarrying generally: [70]

The position that Colin refers to as “quarry master” at the Grandee Quarry has been held by a number of different people and entities over time, including: [71]

Jimmie gave evidence that, when Tastex terminated its partnership with Casalga Pty Ltd, Tastex purchased the plant and equipment of that partnership. [75]

Jimmie gave evidence that he had a conversation with Colin on about 30 August 1996 in which Colin suggested that Jimmie go into partnership with Colin and John, saying: “We can do all of the bookwork and arrange the marketing and you can run the Quarry”. [76] Colin does not recall this conversation, or any conversations with Jimmie before entering into the Morris Carpenter Partnership. [77]

The Morris Carpenter Partnership was the subject of a written partnership agreement dated 1 September 1996 between Tastex and Central West (which was then known as CG & JR Morris Pty Ltd). [78]

The recitals to the partnership agreement recorded that the parties intended to “carry on in partnership the business of quarrying”.

The partnership agreement provided that:

The partnership agreement required proper books of account to be kept and accounts to be prepared as at 30 June each year. [84] Annual financial statements and taxation returns were in fact prepared by the partnership’s accountants on the instructions of Colin and his wife, Carol. [85]

Either partner was entitled to withdraw from the partnership at any time on giving three months’ prior notice to the other partner. [86]

There is no dispute that Tastex contributed to the partnership the plant and equipment required to extract the gabbro from the land, cut and shape it in preparation for sale, and load it onto trucks for transport to customers. [87]

Colin gave evidence that he and John contributed two additional items of equipment and “the right to mine or quarry”. [88] The additional items of equipment were one crane and one compressor, which added to the crane and the three compressors that Tastex had acquired at the end of its partnership with Casalga Pty Ltd and brought in to the Morris Carpenter Partnership. [89]

When the Morris Carpenter Partnership commenced, the right to mine was with Kathryn, Alison and John as joint tenants under the first private mining agreement. [90] Between John’s death one year later and the expiry of the first private mining agreement at the end of 1997, Kathryn and Alison had the right to mine. Colin did not have any right to extract granite from Lot 31 and Lot 134 until 1 January 1998. As I understand the submissions, there is no dispute between the parties that Colin and John caused the “right to mine or quarry” to be contributed to the partnership when it was established in 1996 and that Colin continued to do so after John’s death in 1997. However, the plaintiffs characterise the “right to mine or quarry” as the whole of the rights conferred by the private mining agreements, notwithstanding that those agreements were not assigned to the Morris Carpenter Partnership. The defendants characterise the “right to mine or quarry” as merely an implied licence to access the Grandee Quarry for the purpose of conducting a contract quarrying operation. [91] For the reasons explained at [224]-[227] below, I have found that Colin and John’s contribution to the partnership of the “right to mine or quarry” was, in substance, the assurance that the lessees would permit all of the rights under the private mining agreements to be exercised by and for the benefit of the partnership for the duration of the partnership.

Jimmie attended the Grandee Quarry each working day. Colin and John attended less frequently and did not participate in the physical work of quarrying. [92]

Mrs Huggard acted as a selling agent for the gabbro mined from the Grandee Quarry. Mrs Huggard notified Jimmie by telephone of the dimensions of stone that she had sold to customers. Jimmie then cut stone blocks to fulfil the customers’ orders and loaded the blocks onto trucks for transport to the customers. [93]

Jimmie gave evidence that the market for dimension stone from the Grandee Quarry was inconsistent during the period of the Morris Carpenter Partnership. There was strong demand at times, and no sales at all at other times. [94] Colin did not dispute this evidence, and described Grandee Granite as being in competition with granite quarried and processed in China. [95] In 2002, Jimmie travelled to China together with Colin and Damian to speak with potential buyers of Grandee Granite. [96]

Customers paid the purchase price for Grandee Granite to Mrs Huggard, who applied the moneys received in the manner set out at [52] above. It is only the additional monthly payments that are the subject of dispute in these proceedings, as I have already noted at [53] above.

The evidence includes handwritten records prepared by Mrs Huggard for some months during the period from July 2000 to August 2003. [97] As I have mentioned earlier in these reasons, these records include payment advices addressed to Colin that setting out additional monthly payments made to him totalling $246,324.45 during that period. The monthly amounts varied from between $862.96 to $16,568.28. The average additional monthly payment amount over this period was $6,482.22.

Colin acknowledged that the additional monthly payments that he received from Mrs Huggard were from the proceeds of sale of granite quarried by the Morris Carpenter Partnership, and that he received those payments in addition to the royalty and lease payments made to him as an owner of Lot 31. He could not recall what the additional monthly payments were for and said that Mrs Huggard would be the only person who could explain it. Colin’s defence went so far as to assert that the payments were made “at the instigation of” Mrs Huggard, but there was no evidence to support this. Colin contended that the monies from which the additional payments were made were not partnership funds. According to Colin, the Morris Carpenter Partnership was only entitled to receive from the sale proceeds of Grandee Granite a fee negotiated with Mrs Huggard per cubic metre of stone quarried. Within the partnership, it was Colin (with the assistance of his wife Carol) who took responsibility for the preparation of the partnership’s financial statements and tax returns and provided information to the partnership’s accountants. Colin did not instruct the accountants to record the additional monthly payments in the partnership’s accounts. He regarded the additional monthly payments as none of Jimmie’s business. That was his response when asked by Jimmie what payments he was receiving. [98]

The defendants submitted that Jimmie was aware of the additional monthly payments. [99] In support of this submission, the defendants relied on Jimmie’s evidence in cross-examination that:

There is no evidence of the process by which the fee per cubic metre was agreed with Mrs Huggard. However, Jimmie clearly accepted in cross-examination that the fee paid to the Morris Carpenter Partnership was agreed with Mrs Huggard. [102]

Jimmie was aware that Mrs Huggard retained a sales commission plus a royalty or lease premium from the sale proceeds. [103] These proceedings do not involve any dispute concerning those payments to Mrs Huggard.

Jimmie believed that Mrs Huggard deposited the balance of the sale proceeds into the bank account of the Morris Carpenter Partnership, which was operated by Colin and his wife, Carol. From that account, they paid Jimmie a weekly wage and paid other expenses of the partnership. According to Jimmie, Central West kept the balance of the sale proceeds. As I understood his evidence as a whole, Jimmie was referring to his understanding that the balance of the sale proceeds were paid into a bank account that was operated by Colin and Carol, being the Central West side of the Morris Carpenter Partnership, and to which Jimmie had no access. [104]

In cross-examination, Jimmie accepted that he knew the price per cubic metre that was being paid to the Morris Carpenter Partnership from time to time, and that he monitored the market prices for granite. He was therefore able to deduce the approximate amount of sale proceeds that was not being paid to the partnership. It is clear from his evidence that he assumed that the landowners were receiving these amounts. Contrary to the submissions made on behalf of the defendants, the evidence does not support a finding that Jimmie knew that Colin was receiving the additional monthly payments over and above royalty and lease payments that he received as an owner of Lot 31. [105]

On the basis of the evidence referred to at [52] and [103]-[104] and [107]-[110] above, I find that Jimmie was not aware of the additional monthly payments made to Colin during the period of the Morris Carpenter Partnership. In fact, those additional monthly payments were not disclosed by Colin’s defence and evidence in these proceedings until Colin served his affidavit sworn on 18 September 2020 during the final hearing.

The defendants submitted that the Court should accept Colin’s evidence that Mrs Huggard instigated the additional monthly payments to him. [106] I reject that submission. First, although Colin’s defence pleaded that Mrs Huggard instigated those payments, he did not give evidence to that effect. [107] He described the historical financial arrangements for the Grandee Quarry that were overseen by Mrs Huggard that he says were continued during the Morris Carpenter Partnership. [108] It may be that Mrs Huggard assumed that the Morris Carpenter Partnership was a partnership to act as quarry master (as the previous partnerships appear to have been) and did not extend to the marketing and sale of the granite. If so, Mrs Huggard may have also assumed that Colin was entitled to the additional monthly payments as the lessee under the private mining agreement. However, there is no evidence about whether Mrs Huggard in fact made these assumptions, as she was not called as a witness (despite the plaintiffs indicating during the hearing that they intended to do so). Nor is there any evidence that Colin or any other person provided Mrs Huggard with any information about the partnership or gave her any instructions about the financial arrangements to be made to reflect the partnership agreement. Any such instructions would have been issued by Colin, who managed the bookwork and accounts while Jimmie and Tastex attended to the work of quarrying and preparing the dimension stone for sale. Colin’s evidence is that the historical arrangements simply continued. In those circumstances, the manner in which Mrs Huggard caused the granite sale proceeds to be distributed during the Morris Carpenter Partnership has no rational bearing on the terms of the partnership, which was the subject of a written agreement, the scope of the partnership business or the question whether Colin was entitled to those payments. Colin’s description of the payments as having been “instigated” by Mrs Huggard is both unsupported by the evidence and irrelevant. Mrs Huggard simply continued historical financial arrangements instigated by Colin or members of his family that she was not instructed to change.

For the reasons explained at [215]-[233] below, I have determined that the business of the Morris Carpenter Partnership included not only the extraction, cutting and shaping of granite from the Grandee Quarry, but also the marketing and sale of that finished product. The sale proceeds of that granite were partnership funds, and the additional monthly payments were made out of those funds.

In his first affidavit sworn on 7 September 2017, Jimmie gave evidence that, by the time the Morris Carpenter Partnership came to an end in August 2003, “there was a large volume of second grade rock which I had stockpiled in the quarry, much of which had been buried under shallow mounds of earth”. [109]

Jimmie gave a more detailed description of the 2003 stockpile in his affidavit sworn on 13 February 2020: [110]

Jimmie gave no evidence of the estimated volume of second grade rock in the 2003 stockpile. In his affidavit sworn on 13 February 2020, Jimmie deposed: [111]

Even excavation and physical measurement of the stockpiled material would not overcome the problem that, according to Jimmie, approximately half of the area of the 2003 stockpile was placed on top of material that had been stockpiled prior to the commencement of the Morris Carpenter Partnership. [112] It is clear from the evidence that this was not done in any organised or planned way. Rather, Jimmie would push second grade material over the edge of the platform where he was working at any given time and some of the happened to accumulate on top of material had been pushed over the edge of working platforms in the same or a similar location within the quarry in years gone by. [113] Mr Philip Brooke, who worked at the Grandee Quarry from about 1993 until 2005, gave evidence that “we (as in the quarry) were always adding to the pile of second grade rocks when we were trying to quarry the first grade rock or on cutting dimension stone”. Mr Brooke described the second grade rock as “plentiful” and “scattered throughout the quarry” and said that it regularly had to be moved in order to gain better access to new areas for quarrying or to form protective barriers to ensure machinery did not come too close to the edge of a hill. [114] Mr Brooke was not cross-examined.

The defendants’ submissions asserted, without analysis, that Jimmie had affixed the 2003 stockpile to the land by burying it beneath road base. The defendants submitted that the stockpile is therefore part of the land and irrecoverable without an authorisation issued under the Mining Act.

Whether the 2003 stockpile has become a fixture and therefore part of the land depends essentially on the intention with which the stockpiled material was left on the land and buried in road base. The intention must be objectively ascertained by reference to the degree of annexation, the object of annexation and any other relevant circumstances. If the material was buried with the intention that it should remain there permanently or for an indefinite or substantial period, that favours the conclusion that the material is a fixture: TEC Desert Pty Ltd v Commissioner of State Revenue (2010) 241 CLR 576; [2010] HCA 49 at [23]-[24] (French CJ, Gummow, Heydon, Crennan and Kiefel JJ).

In my opinion, the evidence does not support attributing to Jimmie an intention that the 2003 stockpile would remain buried under the road base material permanently or indefinitely. I refer in particular to the nature of the quarrying process, including the regular movement of second grade material to gain access to new parts of the gabbro deposit within the quarry, and the ready availability of excavators on site to move the 2003 stockpile (or any part of it) as and when required for those operational purposes or if required to fill any orders placed by customers for second grade rock.

For those reasons, I reject the defendants’ submission that the 2003 stockpile is part of the land and cannot be extracted without a mining lease or other authorisation. However, the difficulties in identifying the 2003 stockpile and separating it from material excavated and stockpiled before the Morris Carpenter Partnership began, and then identifying and quantifying any saleable material within it, remain.

According to Mr Wayne Rowe, a registered land surveyor whose report was tendered by the plaintiffs, it is in fact impossible to quantify the 2003 stockpile. [115] Mr Rowe took aerial photographs of the Grandee Quarry site and relied on Jimmie’s identification of the location of the 2003 stockpile on those photographs. On that basis, Mr Rowe calculated the area of the 2003 stockpile as 20,085m2. Mr Rowe was asked to express his opinion about the probable volume of the 2003 stockpile. He gave evidence that the volume of the stockpiled material in the 20,085m2 area identified by Jimmie as the 2003 stockpile: [116]

The plaintiffs submitted that the 2003 stockpile was an asset of the Morris Carpenter Partnership at the end of the partnership, relying on the following evidence of Colin in cross-examination: [117]

In giving that evidence, Colin did accept that the material quarried by the partnership belonged to the partnership. However, Colin’s evidence does not overcome the impossibility of identifying and quantifying that material, which was the subject of Mr Rowe’s evidence referred to above. That problem existed at the end of the Morris Carpenter Partnership in 2003, and has been compounded by the further accumulation of second grade material on the land during the September 2003 to December 2014 period.

It is common ground that Jimmie and Colin made a mutual decision to end the Morris Carpenter Partnership in about August 2003 after the partnership had struggled financially for a period of time. [118]

The financial report for the partnership for the year ended 30 June 2003 recorded that the partnership had traded at a profit of $25,784 for that year (before tax) and had a net asset deficiency of $26,767. [119] As I have already mentioned, the financial report was prepared solely on the basis of information provided by Colin and his wife, Carol. Jimmie had no involvement in the preparation of the financial report.

The partnership assets included plant and equipment, and the liabilities included finance charges in relation to that plant and equipment. When the partnership came to an end, Jimmie and/or Tastex retained that plant and equipment and took over responsibility for making the payments under the corresponding finance leases. That plant and equipment was used for the ongoing quarrying activities at Grandee Quarry referred to at [167]-[170] below. [120]

Jimmie gave evidence that there was no formal winding up of the affairs of the partnership after it came to an end in about August 2003. [121] As the plaintiffs submitted, the financial report and tax return for the year ended 30 June 2003 does not constitute a final account of the partnership for the purpose of s 44 of the Partnership Act 1982 (NSW).

The financial report for the year ended 30 June 2003 did not include the right to mine as an asset of the Morris Carpenter Partnership. The plaintiffs submitted that the Court should infer that no account was taken of the right to mine, [122] which was an asset of the partnership as Colin and John had contributed that right to the partnership at its inception. [123] As I have already mentioned, I have found that the right to quarry was not an asset of the Morris Carpenter Partnership at the end of the partnership. My reasons for that finding are explained at [223]-[227] below.

The Morris Carpenter Partnership financial report for the year ended 30 June 2003 did not include any stockpiled material as a partnership asset. As I have referred to above, it is common ground that no account was taken of the 2003 stockpile after the partnership ended. [124]

In the course of an exchange of solicitors’ correspondence in August 2019 concerning the preparation of this matter for hearing, the defendants’ solicitors requested that the plaintiffs clarify the basis on which an accounting is sought and asked whether it was alleged that no final accounts had been settled for the partnership. [125] The plaintiffs’ former solicitors replied, relevantly: [126]

The defendants rely on this as an admission by the plaintiffs that the 2003 stockpile was the only partnership asset in respect of which no account has been taken. [127]

The defendants also emphasise that, in cross-examination, Jimmie accepted that he was satisfied with the final arrangements that were put in place in relation to the financial affairs, assets and liabilities of the partnership when it came to an end in 2003. [128]

It is common ground that the plaintiffs and Colin entered into an agreement in relation to the quarrying of granite after the conclusion of the Morris Carpenter Partnership. The dispute relates to the terms of that agreement and the legal consequences of the legislative changes that rendered the ongoing quarrying activities unlawful from 15 November 2011. [129]

The plaintiffs’ pleaded case refers to two agreements, which I have described earlier in these reasons as the Quarrying Agreement and the Future Mining Agreement. That is perhaps unnecessarily complicated, as the plaintiffs rely on one single conversation between Jimmie and Colin on or about 4 July 2003 as the source of both alleged agreements. I will nevertheless persist with the plaintiffs’ distinction between the two alleged agreements because the plaintiffs make separate claims for damages for alleged repudiation of each agreement. [130]

I now turn to the critical conversation.

Jimmie gave evidence that he had the following conversation with Colin about the dissolution of the partnership on or about 4 July 2003: [131]

That is Jimmie’s evidence concerning the alleged Quarrying Agreement. [132]

According to Jimmie’s evidence, the conversation continued: [133]

According to Jimmie’s evidence, the conversation concluded with Colin encouraging Jimmie to stockpile the small boulders and offcuts.

Colin denies that this conversation occurred. Colin was aware from payment advices produced by Mrs Huggard that the rate of $600 per cubic metre had been paid to the plaintiffs after the end of the Morris Carpenter Partnership, but gave evidence that this rate had been struck between the plaintiffs and Mrs Huggard in accordance with the agreement that he says he made with the plaintiffs. [134]

Colin also denies agreeing to the other rates referred to in Jimmie’s account of the conversation above and said that he has never agreed a price for offcuts and small boulders, and would never do so, as they are not even worth stockpiling but simply need to be stored on a part of the land where they do not interfere with quarrying operations. [135] Colin’s evidence about the value of offcuts and small boulders is consistent with the manner in which such material is treated during the quarrying process [136] and is also consistent with Dr Hensel’s evidence that the stockpiles of such material that he observed during his site visit to the Grandee Quarry in 2019 was considered wastage. [137]

Colin also gave evidence that he had never offered any exclusive rights to mine all of the rock in the Grandee Quarry “because it is not my business to do so. I would be unable and unwilling to agree to anything on behalf of my sisters”. Colin said that he had never made any agreement on behalf of his sisters, Kathryn and Alison, and had not even spoken to them since John’s death in 1997. However, in cross-examination, Colin agreed that, as sole lessee under the second mining agreement that did not expire until 2012, he was in fact in a position in July 2003 to grant exclusivity to Jimmie and Tastex for a period of time commensurate with that lease. [138]

Colin did not advance his own account of a specific conversation with Jimmie about the basis or terms on which Tastex would operate at the Grandee Quarry after the end of the Morris Carpenter Partnership. Rather, Colin gave evidence of the circumstances referred to above and relied on that evidence in denying Jimmie’s account of the conversation and advancing his own version of the agreement referred to at [78] above.

Mr Wayne Markwort worked for the Morris Carpenter Partnership at the Grandee Quarry from 1999 until he suffered a back injury in 2003. Mr Markwort gave evidence that, before he ceased working at the quarry in 2003, he heard Colin say to Jimmie on several occasions words to the effect that Jimmie should “open” particular darker coloured rock deposits within the quarry so that they could all make a lot of money. [139] As the plaintiffs’ submitted, Colin did not dispute this aspect of Mr Markwort’s evidence. [140]

The plaintiffs submitted that Jimmie’s evidence of the conversation that he relies on as the Quarrying Agreement and the Future Mining Agreement is “corroborated to a degree” by Mr Markwort’s evidence. [141] I reject that submission. Mr Markwort’s evidence is not directly relevant to the subject matter of the conversation that Jimmie says he had with Colin in July 2003. Moreover, Mr Markwort’s evidence is unspecific as to time. Mr Markwort worked at the Grandee Quarry between 1999 and some time in 2003. It would be impermissible to speculate about whether the statements that he recalls occurred during the period of the Morris Carpenter Partnership or in the latter half of 2003 after the partnership had ended. If Colin made statements to the effect described by Mr Markwort during the partnership, that would be entirely consistent with the scope of the partnership business, which I have found included the marketing and sale of granite, [142] and would have no bearing on whether Jimmie’s version of the July 2003 conversation occurred.

The plaintiffs also submitted that correspondence between the parties’ solicitors in September 2003 corroborated Jimmie’s evidence of the conversation referred to above. [143]

On 4 September 2003, the solicitors for Colin and Central West (then still called CG & JR Morris Pty Ltd) wrote to the solicitors then acting for the plaintiffs in relation to “CG & JR Morris Pty Limited Agreement with Tastex Pty Limited”. The letter stated (my emphasis): [144]

Neither the annexure referred to in paragraph 12 nor the schedule referred to in paragraph 17 of the letter were in evidence.

The former solicitors for the plaintiffs replied to that letter on 8 September 2003 in the following terms (my emphasis): [145]

There is no evidence of any further discussions or negotiations between the parties or their solicitors about these matters after 8 September 2003.

The plaintiffs submitted that this correspondence between the solicitors corroborates Jimmie’s evidence of the conversation referred to at [137]-[141] above in that:

I accept that the solicitors’ correspondence reveals that the parties were discussing a contract for the plaintiffs to quarry. However, it reveals that those discussions were ongoing as at 8 September 2003, and that no concluded agreement had been reached approximately two months after Jimmie says that he had the conversation with Colin referred to at [137]-[141] above. The 4 September 2003 letter set out the matters that Colin regarded as “key issues” and the 8 September 2003 letter revealed that the parties were not in agreement at that time about several of those issues, including whether Colin or the plaintiffs were entitled to select the areas from which granite was to be extracted and the parties’ respective remediation and maintenance obligations. There is no evidence about whether the parties subsequently reached agreement about those “key issues”.

On Jimmie’s version of the conversation, it was agreed that Tastex would have exclusive rights to extract granite at the Grandee Quarry. This was not mentioned in the letter from the solicitors for Colin and Central West. It was raised in paragraph 13 of the response from Jimmie’s solicitors, but not in terms that suggested it had already been agreed or even discussed between Jimmie and Colin. There is no evidence about whether this was subsequently accepted by Colin and Central West.

Contrary to the plaintiffs’ submissions, the correspondence does not evidence any agreement that Tastex would select the areas in which quarrying was to be undertaken. It is clear from paragraph 10 of both letters that the parties had opposite views about this issue as at 8 September 2003 and there is no evidence about whether or on what terms that difference was subsequently resolved.

The plaintiffs’ submission that the correspondence confirms that the parties had agreed on a rate of $600m3 for first grade stone is also wrong. Paragraph 7 of the 4 September 2003 letter reveals that Colin and Central West considered that the rates were to be mutually agreed between them. It is only the reply from the plaintiffs’ solicitor that claims that a rate of $600m3 had already been agreed. I infer from the parties’ subsequent conduct in which prices paid to Tastex did in fact fluctuate [146] that the parties did not in fact enter into an agreement under which the price per cubic metre payable to Tastex was a fixed amount. It is permissible to have regard to this subsequent conduct in determining whether an oral agreement was made and, if so, on what terms: County Securities Pty Ltd v Challenger Group Holdings Pty Ltd [2008] NSWCA 193 at [7]-[27] (Spigelman CJ); Lawrence v Ciantar [2020] NSWCA 89 at [114] (Bathurst CJ, Meagher and Gleeson JJA agreeing). I also note that, having regard to the evidence adduced by the plaintiffs about the uncertainty and volatility of prices in the market for granite, it is inherently unlikely that Colin would have agreed to a fixed price on a long-term basis. [147]

The solicitors’ correspondence is inconsistent with Jimmie’s evidence about the conversation in one critical respect. According to Jimmie, Colin said to him “You have the exclusive rights to all of the rock in the Quarry”. In these proceedings, the plaintiffs allege that this was an agreement granting exclusive quarrying rights to Tastex in respect of all of the stone remaining in the Grandee Quarry as at mid-2003 for such period of time as it took to extract that stone (including beyond Jimmie’s lifetime). [148] However, the solicitors’ correspondence reveals that the agreement that the parties had been discussing in 2003 was for a fixed term of 5 years with an option for Tastex to renew for a further period of five years. There was no dispute between the parties about this term as at September 2003. The agreement that was under discussion, if it had been concluded, would have expired in 2013.

When asked about the solicitors’ correspondence in cross-examination, Jimmie could not explain the discrepancy between his evidence that Colin promised him in the critical conversation “exclusive rights to all of the rock in the Quarry” and the fixed term referred to in the correspondence. However, he did not dispute that what was being negotiated as at September 2003 was a fixed term of up to ten years: [149]

Jimmie also gave evidence he had no reason to think that his solicitor at the time would have agreed to the term of five years plus five years in the letter dated 8 September 2003 without Jimmie’s instructions to do so. He acknowledged that this fixed term was a very different proposition than exclusive rights to mine all of the rock in the Grandee Quarry. [150]

Jimmie nevertheless maintained that the conversation set out at [137]-[141] above occurred. [151]

For all of the reasons at [149]-[160] above, I reject the plaintiffs’ submission that the terms of the correspondence corroborate Jimmie’s evidence about the conversation. His own solicitor’s letter, which must have been written on and sent his instructions, contradicts his evidence of the conversation in several key respects. It is inherently unlikely that Jimmie would have given instructions to send the letter if he had already made the agreement that he claims to have reached with Colin in the conversation said to have occurred about two months earlier in July 2003.

In assessing Jimmie’s evidence of the alleged conversation, I have been mindful of the well-known observations of McLelland CJ in Eq in Watson v Foxman (1995) 49 NSWLR 315 at 319:

The conversation is alleged to have occurred in July 2003. Jimmie’s evidence about the conversation is set out in his affidavit sworn more than 14 years later on 7 September 2017. I have therefore placed primary emphasis on the objective surrounding facts that are either undisputed or established by contemporaneous documents, and the inherent probabilities and improbabilities: Fox v Percy (2003) 214 CLR 118; [2003] HCA 22 at [28]-[31] (Gleeson CJ, Gummow and Kirby JJ); Re Hillsea Pty Ltd [2019] NSWSC 1152 at [16]-[21] and the authorities there referred to. Whilst I consider that Jimmie was an honest witness, [152] I have concluded that his recollection of the conversation said to have occurred in July 2003 is unreliable as it runs contrary to the contemporaneous solicitors’ correspondence and is also contrary to the inherent probabilities in several respects, as I have explained above. Jimmie’s evidence in relation to the conversation is not sufficient to discharge the plaintiffs’ onus of proving on the balance of probabilities that the conversation occurred in the terms alleged. Taking into account all of the matters referred to at [143] and [149]-[160] above, I do not feel actual persuasion that the conversation occurred in the manner and terms described in Jimmie’s evidence. In forming this view, I have not relied on Colin’s evidence, except to the extent that it is corroborated by other evidence as referred to at [143] above.

It follows from my rejection of Jimmie’s evidence of the conversation that I also reject the plaintiffs’ submission that the solicitors’ correspondence is suggestive of that conversation being “a fourth category Masters v Cameron contract i.e. the parties intend to be immediately bound while expecting to make a later more formal document containing by agreement additional or varied terms.”

For those reasons, the plaintiffs have failed to prove the alleged Quarrying Agreement and the alleged Future Mining Agreement on the balance of probabilities. On the basis of the solicitors’ correspondence referred to above, I find that no agreement had been reached as at 8 September 2003 and that negotiations were continuing at that time. On the basis of the parties’ subsequent conduct during the period until about December 2014 – Tastex’s ongoing extraction of granite from the Grandee Quarry, Colin’s ongoing marketing and sale of that granite (through Mrs Huggard) and the payment to the plaintiffs of varying rates per cubic metre of granite sold [153] - I find that they made an agreement essentially on the terms for which Colin contends. [154] That is to say, they agreed that the plaintiffs would mine, cut and shape granite in preparation for sale and, in respect of granite sold, Colin would pay the plaintiffs an amount per cubic metre to be determined by the plaintiffs and Mrs Huggard at the time of sale. Having regard to the work and cost involved in extracting the granite that was known to the parties at the time and the fact that the plaintiffs were not entitled to any reward for that work unless and until the granite was sold, I infer that the agreement also included a term that Colin would use reasonable efforts to sell the first grade material. I do not infer from those circumstances that the agreement included a term requiring Colin to use reasonable efforts to sell the second grade material. As referred to at [9] and [117] above, there was already a plentiful supply of second grade material stockpiled at the Grandee Quarry and customers had less demand for that material. The demand for second grade rock was sometimes non-existent. I note that even Jimmie’s account of his conversation with Colin at [137] above does not include discussion of Colin being required to try and sell the second grade material, although the possibility of such sales in the future was referred to. The agreement lacked the security of a fixed term for which the plaintiffs were negotiating in September 2003.

Jimmie gave evidence that the average price paid to the plaintiffs for granite extracted from the Grandee Quarry during this period was between $500 and $600 per cubic metre for first grade stone and between $225 and $250 per cubic metre for second grade stone, although there were few sales of second grade stone. [155]

The plaintiffs submitted that Jimmie’s evidence as to the average price for first grade stone should be accepted as it is corroborated by Mrs Huggard’s payment advices. [156] Jimmie’s evidence in relation to the price for first grade stone is indeed consistent with the payment advices issued by Mrs Huggard to Tastex during the period from September 2003 to December 2003, [157] but there is no documentary evidence of the prices paid to Tastex for the period after December 2003.

The plaintiffs submitted that, because Jimmie’s evidence about the average price for first grade stone was corroborated by the handful of payment advices tendered for the period September to December 2003, his evidence about the average price of second grade stone was also likely to be accurate and should be accepted. The plaintiffs also relied on evidence of three instances in 2005, 2010 and 2011 in which Jimmie had quoted Mrs Huggard or Damian prices of between $225 and $250 per cubic metre and a further instance in 2014 in which he had quoted Damian a price of $300 per cubic metre for second grade stone. The plaintiffs submitted that this evidence corroborated Jimmie’s evidence that he entered into an oral agreement with Colin in 2003 that included an agreed price of $300 per cubic metre for second grade stone. [158]

I reject that submission. What Jimmie’s evidence, together with the evidence of the four quotes, demonstrates is that prices fluctuated from time to time and Jimmie was prepared to quote prices for second grade rock below the price for second grade rock that he claims to have agreed as a fixed price under the alleged Quarrying Agreement. There is evidence to suggest that the price for first grade rock also fluctuated, and that a price of $450 per cubic metre was agreed at one time. [159] As explained above, that is one of the reasons why I have found that the plaintiffs did not enter into the alleged Quarrying Agreement and entered into an agreement on the terms referred to at [166] above.

It was common ground between the parties that, from 11 November 2011, the granite extracted from the Grandee Quarry and stockpiles on Lots 31 and 134 has been the property of the owners of the land by reason of s 11(3) of the Mining Act. That is to say, granite stockpiled on Lot 31 is owned by Colin (as to 50 per cent) and by Kathryn and Alison (as to 25 per cent each), whereas granite stockpiled on Lot 134 is owned by Mr and Mrs Dunkley. [160] In my opinion, this is incorrect as a matter of law because s 11(3) did not apply for the reasons explained at [42]-[47] above and the stockpiled material is not part of the land for the reasons explained at [118]-[121] above. Nevertheless, if Colin were to sell any stockpiled material, he would need to negotiate with Kathryn and Alison (who continue to assert an interest in the material stockpiled on Lot 31). Colin would also need to negotiate with Mr and Mrs Dunkley for access to Lot 134 for the purpose of removing stockpiled material for sale.

It has been Colin’s consistent position that Jimmie and Tastex will be paid for any granite that they extracted during the September 2003 to December 2014 period if and when it is sold. [161] Jimmie complains that nothing has been done to sell the 2014 stockpile to ensure that the plaintiffs are paid. [162] However, as I have already referred to, there have been some sales in the period after 2014 for which the plaintiffs have been paid.

The Department of Industry, Resources and Energy did not notify Colin, as the private mining agreement lessee, of the amendments to the Mining Act. [163] Quarrying continued unlawfully from 15 November 2011 until about late November or early December 2014 when Colin became aware of the amendments. Colin then told Jimmie to cease quarrying and remove Tastex’s equipment from the land because the private mining agreement had expired and there was no longer an authorisation in place for the Grandee Quarry. [164] There have been no subsequent quarrying operations on the land.

The 2014 stockpile

Jimmie gave evidence to the effect that, between 2003 and 2014, he used Tastex’s equipment to extract and stockpile approximately 4,000m3 of material on the Grandee Quarry site. Jimmie described the 2014 stockpile as “comprised of small amounts of first grade rock, larger amounts of second grade rock, boulders, off cuts of rock and overburden” that is stockpiled in layers of various depth”. The material is buried in a number of mounds around the quarry site, but Jimmie’s 4000m3 estimate is his estimate of the total marketable granite contained within those mounds. [165]

Jimmie gave evidence that he arrived at the 4,000m3 estimate (give or take 10 or 20 per cent) at the end of January 2015 by a “combination of using steps equal to 1 metres, which I’ve done for a lot of years and a hundred metre tape”. He says that he measured the mounds, and then estimated the amount of marketable granite contained within the mounds based on what he could see exposed on the surface of the mounds and on his knowledge of the area. [166]

Mr Rowe’s report, tendered by the plaintiff, estimated the area of the 2014 stockpile as 45,839m2 based on aerial photographs of the Grandee Quarry and Jimmie’s instructions as to the areas where he says the 2014 stockpile is located. However, Mr Rowe opined that the volume of the 2014 stockpile could not be calculated using the information available to him for the same reasons that the volume of the 2003 stockpile could not be calculated. That is to say, contour surveys taken prior to the commencement of stockpiling in 2003 and on cessation of quarrying in 2014 would be required to be compared in order to calculate volume. [167]

In addition to the mounds, there are blocks of granite that have been extracted and placed in various locations at the Grandee Quarry. Jimmie took a detailed inventory of these blocks in January 2015, measuring the dimensions of each block to arrive at a cubic metre size and noting whether the block was first or second grade. Jimmie’s written inventory and accompanying photographs were tendered in evidence. The total volume of the 409 blocks recorded in the inventory is 695.367m3. Approximately 10 per cent of these blocks are first grade material and the remaining 90 per cent are second grade material. [168] Jimmie is unable to identify which of the blocks included in the inventory were extracted and stockpiled during the period of the Morris Carpenter Partnership and which blocks were extracted and stockpiled during the period from the end of the partnership until late 2014. [169]

According to Jimmie’s evidence, Kathryn and Alison sold 128 of the 409 blocks were sold by in March 2016 and a further 11 blocks in July 2016 and did not make any payment to Jimmie in respect of those sales. [170] As the defendants submitted, Jimmie adduced no evidence of the terms of his settlement of these proceedings with Kathryn and Alison and it is not known whether those terms included any compensation in respect of those sales. In any event, the blocks remaining on the Grandee Quarry site have been reduced by these sales from the 409 blocks recorded in Jimmie’s January 2015 inventory to 270 blocks. The blocks recorded in the inventory are of varying sizes and cubic metre volumes. There is no evidence that enables me to make any finding about the approximate cubic metre volume of the blocks that were sold by Kathryn and Alison in 2016 and 2017 or the volume of the blocks remaining on site.

The defendants do not dispute that some material was stockpiled during the 2003 to 2014 period. [171]

Colin wrote to the Department of Industry on 7 September 2015 stating that he estimated that approximately 500m3 of “saleable” dimension stone that had been extracted during the period from 1985 to 2014 was stockpiled at the Grandee Quarry. [172] The plaintiffs submitted that no reliance should be placed on that estimate because it was not accompanied by any information from which one could discern how it had been arrived at and because Colin had lied to the Department about other matters. [173]

The material that Jimmie refers to as the 2014 stockpile remains on the Grandee Quarry Site, except to the extent that some of that material has been sold by Colin, Marble Craft, Kathryn and Alison. [174] Jimmie gave evidence that he and Tastex have not been paid for their work in extracting that material, [175] but they have received payments in respect of sales made by Colin as referred to in more detail below and it is not known whether their settlement of these proceedings against Kathryn and Alison included some payment to the plaintiffs in respect of granite sold by Kathryn and Alison.

The plaintiffs submitted that the Court should find on the balance of probabilities that the volume of the 2014 stockpile is 4,000m3, applying the principle that all evidence is to be weighed according to the proof which it is in the power of one party to adduce and in the power of the other party to contradict. [176] The plaintiffs were critical of the defendants for not leading “independent, credible or convincing evidence of the volume of the 2014 Stockpile” despite having “unrestricted access to the quarry and having a consultant geologist (Mr Hobby) available to them”. [177]

The defendants invited the Court to find that the quantity of the 2014 stockpile cannot be determined, with the exception of the 695.367m3 recorded in Jimmie’s detailed inventory. [178]

I reject the plaintiffs’ submissions at [182] above. It has not been within the power of any party during these proceedings to produce evidence of the volume of saleable material within the mounds. According to Mr Rowe, this would have required a contour survey of the land to be undertaken in 2003 and again in 2014. Jimmie’s evidence about the volume of what he refers to as saleable material within the mounds is in very vague terms and does not rise above the level of bare assertion. Jimmie and Tastex did set aside the first and second grade blocks recorded in the inventory, apparently reserving them for future sale. It seems to me to be inherently unlikely that they would have tipped other extracted material that was thought to be saleable at time of extraction into mounds together with overburden. I consider that it is far more likely that Jimmie did not consider this material to be saleable at the time, and it was discarded together with the overburden and other material in the mounds rather than being separated and set aside for potential future sale. [179] I find some further support for that conclusion in the evidence of one of the expert witnesses called by the plaintiff. Dr Hensel gave evidence that he had been shown “very extensive dumps of drilled and split stone” when he inspected the Grandee Quarry in November 2019. Dr Hensel said that these were regarded as “wastage”, although many of the rock chunks would be utilized in many other countries for secondary products. [180] For those reasons, I do not consider that the plaintiffs’ criticisms of the defendants for failing to excavate the mounds to investigate their contents is valid. Even if the defendants had been prepared to do this, this would not have enabled them to adduce evidence of the volume of any saleable material within the mounds that was excavated during the period from September 2003 to late 2014, as opposed to some earlier time.

There is no rational basis for Jimmie’s estimate of 4,000m3. As the defendants submitted, there is no evidence explaining how his measurement of the area of the mounds using his own steps and a 100 metre tape measure enabled to him arrive at any estimate of the volume of each mound, let alone the volume of any saleable material within the mounds.

For those reasons, the evidence adduced by the plaintiffs does not establish a rational basis for making a finding about the approximate volume of any saleable granite in the mounds. However, on the basis of Jimmie’s detailed inventory of individual granite blocks referred to above, I do make the finding for which the defendants contended that 695.367m3 of material had been stockpiled on the Grandee Quarry land as at the end of 2014, approximately 10 per cent of which was first grade material and approximately 90 per cent of which was second grade material.

The plaintiffs acknowledge receiving the payments referred to in Jimmie’s affidavit sworn on 7 September 2017 from Colin in relation to sales of material from the 2014 stockpile in the period after December 2014. In that affidavit, Jimmie referred to various other sales in respect of which he said the defendants had made no payment to him or to Tastex. [181] In his affidavit sworn on 20 May 2018, Jimmie deposed that he had not received any payments from the defendants save for those payments from Colin identified in his 7 September 2017 affidavit. [182]

In closing submissions, the plaintiffs’ claims in respect of non-payment for sales from the 2014 stockpile were limited to: [183]

In relation to the first of the sales referred to above, the documentary evidence records that Tastex was in fact paid for 43 cubic metres at the rate of $181.16 per cubic metre (less a loading charge of $25 per cubic metre and the cost of certain equipment purchased by Central West and passed on to Tastex). [189] Jimmie refers to this transaction in his affidavit sworn on 7 September 2017 and does not suggest that Tastex did not receive the payment of the amount recorded in the payment advice. Colin’s reconciliation report records that payment as having been made on 1 September 2016, which corresponds to the handwritten date on the “paid” stamp on the payment advice. [190] The plaintiffs have failed to prove on the balance of probabilities that they received no payment in respect of this sale.

In relation to the second sale referred to above, Colin’s reconciliation report records a payment to Tastex on 23 December 2016 in the amount of $2,534.18. [191] There is no contemporaneous record identifying the reason for this payment. Jimmie does not refer to it in his 7 September 2017 affidavit and, as I have already stated, claims that he did not receive any payments other than those identified in that affidavit. The amount of the payment divided by 16.5 cubic metres would equate to $153.59 per cubic metre which falls within the range of rates paid to Tastex for stockpile sales in the period after December 2014. Those rates were as low as $80 per cubic metre at times. [192] The plaintiffs have failed to prove on the balance of probabilities that they received no payment in respect of this sale.

The invoices issued by Marble Craft in respect of the remaining three sales referred to above establish that the sales were made for the volumes of stone and at the prices referred to above. Damian acknowledged in cross-examination that Marble Craft did receive the proceeds of sale of some stone extracted by the plaintiffs from the Grandee Quarry. [193] Jimmie’s evidence is that the only payments he or Tastex received were from Colin. [194] The defendants adduced no evidence of any payments having been by Marble Craft to the plaintiffs in respect of these three sales, as Damian acknowledged in cross-examination. [195] However, the defendants relied on the following evidence given by Jimmie in cross-examination: [196]

However, Jimmie was not taken to the details of the three sales made by Marble Craft referred to above. As senior counsel for the plaintiffs submitted, the invoices revealing those three sales were not disclosed to the plaintiffs until the defendants produced them in response to a notice to produce issued by the plaintiffs on the first day of the hearing on 15 September 2020. Assuming that production had occurred by the time Jimmie was cross-examined on 16 September 2020, he cannot reasonably be expected to have absorbed the contents of the bundle of documents produced including the three Marble Craft invoices. In those circumstances, I do not consider that Jimmie’s evidence referred to immediately above can fairly be understood as a concession that he had received payment from Damian or from Marble Craft in respect of the three sales on which the plaintiffs now rely for the purpose of their claim against Marble Craft in conversion.

I am satisfied on the balance of probabilities that Marble Craft did not make any payment to Jimmie or Tastex in respect of the three sales referred to at [188] above. I address the plaintiffs’ claim in conversion in respect of those sales at [258] below.

On 7 May 2015, exploration licence 8371 was granted to Marble Craft in respect of Lots 31 and 134. The licence permitted exploration for a range of minerals, including dimension stone. [197]

In a letter to Jimmie’s former solicitors sent in or about February 2015, Colin stated that Marble Craft applied for the exploration licence “to secure our family interests” by securing “an appropriate authority over the quarry land” to avoid the risk of a third party applying for such an authority and potentially assuming control of the Grandee Quarry. [198]

As referred to at [15]-[16] above, GQ Australia has applied for a mining lease for the Grandee Quarry. Its application had not been determined at the time of the hearing.

The plaintiffs relied on the evidence of two expert witnesses in relation to the likely volume of dimension stone remaining in the Grandee Quarry and the feasibility and cost of extracting, marketing and selling that granite.

Dr David Allen is a geophysicist. In his report dated 18 October 2019, [199] Dr Allen described how he had estimated the volume of dimension stone remaining beneath the surface of Lot 31 and Lot 134 using data obtained from two different electrical resistivity surveys that he carried out at the Grandee Quarry. On the basis of the data produced by those surveys and his expertise and review of literature, Dr Allen concluded that dimension stone extends to a probable depth of about 50 metres below the land surface. Assuming that 25 per cent of this “may be useful”, he estimated that approximately 300,000m3 of dimension stone could be extracted and marketed for sale.

Dr Allen did not explain the reasons for his 25 per cent estimate. In his report, he simply asserted that: “Observations of the existing mined clusters suggests that 25% of the clusters of large corestones may be useful rock.” [200] Dr Allen did not identify what observations he had made of “the existing mined clusters”. Nor did Dr Allen explain why those (unspecified) observations informed his view that 25 per cent of the underground material “may be useful rock”. For example, Dr Allen did not explain what (if any) assumptions he was making about the likely similarity or differences between the “existing mined clusters” (which have not been extracted from underground) and those that might be extracted from as far as 50 metres below the ground surface level. In cross-examination, Dr Allen described the 25 per cent assumption as a “low precision guesstimate”. [201]

Dr Allen did not express any opinion in his report about the extent to which the dimension stone, when extracted, may yield first grade stone as opposed to second grade stone. In cross-examination, he asserted that “a very good estimate can be made at this site from observation of the existing material”. [202] In re-examination, Dr Allen said that, of his 300,000m3 estimate of marketable dimension stone underground, “I expect that at least two thirds are first grade rock” – that is, about 200,000m3 first grade material. [203] Dr Allen did not identify, and was not asked to identify, the basis of this “expectation”. He did not identify any particular observations that he had made of the existing material visible on the site that informed his expectation.

Dr Hans-Dieter Hensel is an investigative geoscientist who has quarried dimension stone for over 20 years at locations in New South Wales, Western Australia and Queensland. In his report dated 8 November 2019, [204] Dr Hensel described an above ground deposit at the Grandee Quarry. He describes these as the two main quarry faces which have already been exposed in part, but which are largely concealed by cover at the edges, and a third platform at the base of the second platform. Dr Hensel describes the height and width of these platforms as a “very substantial mass of granite” that, having regard to Jimmie’s age, “far exceeds that which could be extracted in a lifetime”, even with a much increased workforce. Dr Hensel identified certain challenges involved in extracting granite from the two main quarry faces and opined that these would require a change in extraction methodology and investment in new equipment (a diamond wire saw system at a cost of about $110,000 to $125,000). Dr Hensel did not make any estimate of the likely volume of granite in the three faces he identified, or the volume likely to be extracted in a lifetime.

In relation to the underground deposit, Dr Hensel considered that there was strong likelihood that the dimension stone would be present at depths of 50 metres. However, he observed on site some indications of geological processes that could impact on the uniformity of the granite at depths of 50 metres.

Dr Hensel emphasised the difficulties of extracting dimension stone from underground (my emphasis): [205]

Consistently with those observations, Dr Hensel also stated that “quarrying below the level of the surrounding land creates new challenges and requires additional equipment (e.g. cranes, pumps)”. [206]

Dr Hensel concluded: [207]

In relation to the potential quality of the underground stone, Dr Hensel said that a proper assessment of the quality or grade could only be made after the stone has been extracted, cut and polished. This might impact on sales and prices. [208]

As I understand the evidence, quarrying operations during the Morris Carpenter Partnership and during the period from September 2003 to late 2014 occurred only above the surface level of the land. As referred to at [29] above, the private mining leases that applied until mining became unlawful in November 2011 did not permit underground operations.

In relation to price, Dr Hensel also gave evidence that the granite was “largely subject to a world market” which he described as uncertain and volatile. Dr Hensel said that price fluctuations in the world market caused by local and/or international factors, including exchange rates, “can be major influences in the viability of a dimension stone quarry”. [209]

I accept Dr Allen’s evidence about the electrical resistivity measurements that he carried out at the Grandee Quarry site. However, I reject his estimate that there is approximately 300,000m3 of granite underground that is marketable or potentially marketable. As the defendants submitted and for the reasons I have already explained above, that evidence was no more than a bare assertion. Contrary to the plaintiffs’ submissions, neither the 300,000m3 estimate nor the 200,000m3 first grade stone estimate were based on the results of Dr Allen’s electric resistivity surveys. [210]

Even if I had accepted Dr Allen’s 300,000m3 estimate, I would have rejected his evidence that 200,000m3 of that material would be a first grade quality. That was also a bare assertion. I also note that, if the blocks in Jimmie’s January 2015 inventory are the “existing material” that Dr Allen observed on site and referred to as the basis for estimating the first or second grade quality of the underground stone, then it is not clear how Dr Allen’s estimate that two thirds of the underground stone would be first grade is reconciled with Jimmie’s own evidence that only 10 per cent of the inventory blocks were first grade. Dr Allen did not express any opinion about whether the quality of the stone was likely to be uniform, or to increase or decrease as mining hypothetically progresses from the surface to 50 metres below surface.

Neither of Dr Allen’s bare assertions can be accepted, having regard to the uncertainties identified by Dr Hensel about the quality and uniformity of the granite below ground, based on his geological observations of the site at ground level. I accept, of course, that any estimate the quantity and quality of underground mineral resource is inherently uncertain and findings must necessarily be based on available data and expert opinion. Many of the uncertainties cannot be resolved unless and until granite is extracted, cut and polished, as Dr Hensel pointed out. However, Dr Allen’s opinions about the underground deposit expressed without any reasons and seemingly without any allowance for uncertainties do not suffice to discharge the plaintiffs’ onus of proof. Contrary to the plaintiffs’ submissions, the Court is not bound to accept Dr Allen’s 300,000m3 and 200,000m3 estimates merely because they are “uncontradicted” in the sense that no other witness has offered a competing assertion. [211]

For those reasons, the plaintiffs’ evidence does not establish a rational basis for estimating, even within a wide range, the quantity of dimension stone underground at the Grandee Quarry potentially available for extraction, marketing and sale.

I accept Dr Hensel’s evidence that there is a significant quantity of granite available to be mined above the surface level of the land. However, the plaintiffs have not adduced any evidence that would provide a rational basis for estimating the likely quantity of that above ground deposit or the potentially saleable material within that deposit.

Jimmie and Tastex have been operating another quarry since about 2017. [212]

As explained earlier in these reasons, this claim relates to the additional monthly payments to Colin out of the sale proceeds of granite extracted by the Morris Carpenter Partnership. Jimmie and Tastex became aware of those payments during the final hearing of these proceedings. [213]

As I have already mentioned, the evidence establishes that additional monthly payments in amounts varying between $862.96 to $16,568.28 were made to Colin during the period from July 2000 to August 2003, totalling $246,324.45. There is no evidence about the amount of any additional monthly payments made to Colin in the period between 1 September 1996 (being the commencement of the Morris Carpenter Partnership) and June 2000. [214] Nor is there any evidence from which the likely amount of any such payments could be inferred. Due to the fluctuating market prices for granite referred to by Jimmie and Dr Hensel [215] and the significant variations in the monthly amounts paid to Colin From July 2000 until the end of the partnership, any inference about the likely amount of any such payments prior to July 2000 would be mere speculation. Mrs Huggard may have been able to shed some light on such matters, but the plaintiffs abandoned their intention to call Mrs Huggard to give evidence for reasons that were not explained.

This is no dispute that the additional monthly payments were made to Colin out of the net sale proceeds of granite that had been extracted, cut and shaped by the Morris Carpenter Partnership. The question is whether those net sale proceeds were partnership moneys. That turns on whether, on the proper construction of the partnership agreement, the partnership business was limited to extracting the granite and cutting and shaping it in preparation for sale, or whether it extended to the marketing and sale of the granite.

I have referred to the terms of the partnership agreement and the contributions of each partner to the partnership at [92]-[99] above.

The partnership agreement did not describe the partnership business except in the recitals, which referred to the parties’ intention to “carry on in partnership the business of quarrying”.

Colin and Central West relied on four matters in submitting that the partnership business was limited to the extraction, cutting and shaping of granite and did not extend to marketing and sale of the granite.

First, Colin and Central West submitted that Jimmie’s evidence of his discussion with Colin which preceded the partnership agreement was limited to running the quarry and doing the quarrying. I reject that submission because it misstates the evidence. I have referred to the evidence of the conversation at [91] above. On Jimmie’s account of the conversation, Colin referred to the running of the quarry as the contribution that Tastex would make to the partnership. The reference to the bookwork and marketing was plainly a reference to the contribution to be made by Colin and John (through their company, Central West).

Colin and Central West also relied on evidence given by Jimmie in which he described the quarrying business of the partnership as being conducted on Lot 31 and Lot 134. In my opinion, that evidence merely describes the location where the work of extracting the granite (which was essential to the partnership on any view of the scope of the partnership business) was carried out. It says nothing about whether the business included the sale and marketing of the granite. In any event, the scope of the partnership business falls to be determined in accordance with the partnership agreement, construed in accordance with the principles applicable to the interpretation of commercial contracts. The subjective views of one partner are not relevant to that exercise.

Second, it was submitted on behalf of Colin and Central West that there was no assignment of the lessee’s rights under the private mining agreements to the Morris Carpenter Partnership and that Colin’s evidence that he and John contributed the right to mine merely refers to an implied licence for the Morris Carpenter Partnership to access the Grandee Quarry. As I have mentioned earlier in these reasons, [216] Tastex contends that the right to mine involved all of the rights under the private mining agreements and that those rights were an asset of the Morris Carpenter Partnership in respect of which an account was required to be taken when the partnership came to an end.

I accept that there is no evidence that the rights of the lessees under the private mining agreements were assigned by the lessees to the Morris Carpenter Partnership. However, it does not follow that the partnership business was limited in the manner for which Colin and Central West contend. The partnership agreement was made in circumstances where, for many years, the lessees had marketed and sold on their own account granite mined by third parties. Some of those third parties were partnerships, but members of the Morris family (or corporate entities controlled by them) had not been members of those partnerships. Tastex owned the equipment required to continue extracting the granite from the Grandee Quarry after the end of its partnership with Casalga Pty Ltd in 1996. [217] If the partnership business was limited to the extraction, cutting and shaping of granite, Central West had no meaningful contribution to make to the business. [218]

Rather than engaging Tastex to provide quarrying services, Central West entered into a partnership agreement with Tastex. According to Colin’s own evidence, he and John contributed the “right to mine or quarry” to the partnership. This evidence blurs the lines between Central West (which was entering into the partnership), Colin and John (who were the directors of Central West at that time) and the lessees under the private mining agreements (Kathryn, Alison and John as joint tenants under the first private mining agreement at the time the partnership commenced, and Colin under the second private mining agreement from 1 January 1998). As I have said at [98] above, I understand Colin’s evidence to mean that Colin and John caused the lessees to permit the “right to mine or quarry” to be exercised by the partnership when it was established in 1996 and that Colin continued to ensure that the partnership was permitted to exercise that right after John’s death in 1997.

Having regard to the fact that the Morris Carpenter Partnership involved a Morris family entity entering into a partnership with the entity doing the physical quarrying work for the first time in the very long history of the Grandee Quarry, I find that the contribution of “the right to mine or quarry” constituted more than merely permitting Tastex to enter onto Lot 31 and Lot 134 and extract granite. That right had been granted to the previous quarry masters without any partnership. I find that the contribution was, in substance, ensuring that the lessees permitted all of the rights under the private mining agreements to be exercised by and for the benefit of the partnership for the duration of the partnership. This included the right to sell the granite extracted by the partnership from the Grandee Quarry and all of the other rights under clause 3 of the private mining agreements referred to at [29] above. Those rights were subject to the other provisions of those agreements including the prohibition on underground workings in clause 2. Thus, the contribution facilitated the Morris Carpenter Partnership extracting granite and selling the granite for the benefit of the partnership.

Whilst the Morris Carpenter Partnership was terminable on three months’ notice, the term of the second private mining agreement did not expire until 2012. It is inherently unlikely in those circumstances that the lessees intended to assign their rights under the private mining agreements to the partnership irrevocably. Even if they had intended to do so, they took no steps to make any such assignment and they were not parties to the partnership agreement. I reject the plaintiffs’ submission that the “right to mine or quarry” contributed to the partnership was an asset that remained with the partnership to be accounted for between the partners when the partnership came to an end. As I have found above, the contribution made by Colin and John was to ensure that that the lessees permitted their rights under the private mining agreements to be exercised by and for the benefit of the partnership for the duration of the partnership.

Third, Colin and Central West submitted that the partnership business is described in the partnership agreement as “quarrying”, not “quarrying and marketing”. This submission relies solely on one potential literal meaning of the word “quarrying” (namely extracting, cutting and shaping), ignoring the another potential meaning (extracting, cutting and shaping and selling). The submission also ignores the historical matters and the nature of the parties’ respective contributions to the partnership referred to at [224]-[227], which were circumstances known to both partners at the time the partnership agreement was entered into. Those circumstances form part of the context in which the words “the business of quarrying” in the partnership agreement fall to be construed. Applying the established principles applicable to the construction of commercial contracts such as this partnership agreement, a reasonable business person in the position of the parties with knowledge of the matters referred to at [224]-[227] above would have understood those terms to mean the business of extracting, preparing for sale, marketing and selling granite from the Grandee Quarry: Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7 at [35] (French CJ, Hayne, Crennan and Kiefel JJ); Simic v New South Wales Land and Housing Corporation (2016) 260 CLR 85; [2016] HCA 47 at [78] (Gageler, Nettle and Gordon JJ); Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd (2017) 261 CLR 544; [2017] HCA 12 at [16] (Kiefel, Bell and Gordon JJ).

I accept that knowledge of s 11 of the Mining Act should also be attributed to the reasonable business person for the purpose of construing the partnership agreement. However, contrary to the submissions made on behalf of Colin and Central West, I do not consider that s 11 supports the construction of the partnership agreement for which they contend. Rather, s 11 begs the question: by whom or on whose behalf was the granite mined? By reason of Colin and John’s contribution to the Morris Carpenter Partnership that I have referred to above, it was mined by and on behalf of the partnership.

Fourth, Colin and Central West submitted that the Morris Carpenter Partnership was a partnership at will. As I have referred to at [96] above, either partner was entitled to withdraw from the partnership on three months’ notice. Upon the withdrawal of one partner, the partnership agreement conferred on the remaining partner an option to purchase the withdrawing partner’s interest and set out a process by which the value of that interest and the amount payable were to be determined. In my opinion, these provisions are not relevant to the question of the scope of the partnership business. The purchase and valuation process would work equally well, irrespective of whether the business extended to the marketing and sale of the granite. However, the ability of either partner to withdraw from the partnership on three months’ notice is relevant to my findings of fact above about the substance of the “right to mine or quarry” that Colin and John contributed to the Morris Carpenter Partnership.

For those reasons, I reject the submissions made on behalf of Colin and Central West that the four matters referred to above establish that the partnership business was “a service contract for contract quarrying”. I find that the business of the Morris Carpenter Partnership extended beyond contract quarrying and included the marketing and sale of the granite extracted from the Grandee Quarry.

For completeness, I note that in support of their contention as to the limited scope of the partnership business and in disputing the plaintiffs’ allegation that the additional monthly payments were fraudulent, Colin and Central West relied on the evidence that the partnership was paid a fee struck with Mrs Huggard per cubic metre of granite sold. It was submitted this and other evidence to which I have referred at [107]-[110] above supports a finding that Jimmie and Tastex knew that net sale proceeds were being retained by Colin and/or Central West. For the reasons explained at [111] above, I have rejected that submission and found that Jimmie and Tastex were not aware of the additional monthly payments.

For those reasons, I find that the sale proceeds of granite mined by the Morris Carpenter Partnership were partnership monies and the additional monthly payments made to Colin were paid out of partnership monies.

That disposes of all but one of the submissions made on behalf of Colin in defence to Tastex’s claim for moneys had and received. Colin did not rely on any defence of change of position or any limitation defence. The only issue remaining for consideration is Colin’s submission that the claim in money had a received is misconceived because it ignores the existence of the Morris Carpenter Partnership and the interests of the partners and seeks an order for payment directly to Tastex as one of the partners.

I accept that submission for the following reasons.

The additional monthly payments were made out of the sale proceeds of granite mined by the Morris Carpenter Partnership after the various partnership expenses had been paid. [219] The amounts of those payments represented profits of the partnership, in which Tastex and Central West were entitled to share equally under the terms of the partnership agreement.

The plaintiffs pleaded that Colin accepted the additional monthly payments knowing that they were wrongful, in the sense that they were paid in breach of Central West’s fiduciary obligations owed to the partnership and/or they were fraudulent. [220] The contention that the payments were “fraudulent” involved, in substance, a contention that Colin knew that the payments he received were made out of partnership funds to which Tastex and Central West were entitled. The plaintiffs’ submissions were devoid of any analysis as to how this gave rise to a restitutionary claim for money had and received, as opposed to a claim for knowing receipt of partnership monies paid in breach of a fiduciary obligation owed by Central West to Tastex as its partner. After summarising the evidence, the plaintiffs simply submitted that “the appropriate finding of fact is that the ‘extra payments’ made to Colin were partnership income and belonged to the partnership” and that Colin’s conduct in taking those payments was fraud or wrongful “and Colin is liable to repay 50% to Tastex as money had and received”. [221] As noted at [56] above, no Barnes v Addy claim was pleaded.

As the High Court said in Farah Constructions Pty Ltd v Say-Dee Pty Ltd, unjust enrichment is not a definitive legal principle according to its own terms and is not identified by subjective evaluation of what is unfair or unconscionable: (2007) 230 CLR 89; [2007] HCA 22 at [150]-[151] (Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ). Their Honours continued (at [151]):

For those reasons, Colin’s receipt of the additional monthly payments was not unjust in the requisite sense for the purpose of a claim for money had and received, and that claim fails. The plaintiffs did not press any claim against Central West for breach of fiduciary duty. [222]

That conclusion renders it unnecessary to address questions of quantum. However, if the plaintiffs’ claim against Colin for money had and received had succeeded, I would have limited the order for restitution to $123,162.22, being 50 per cent of the total additional monthly payments proved to have been made to Colin out of partnership money during the period from July 2000 to August 2003. It will be recalled that there is no evidence of the amount of any additional monthly payments made to Colin during the period from the commencement of the partnership until June 2000. In circumstances where the plaintiffs departed from their stated intention of calling Mrs Huggard to give evidence, and offered no explanation from that change of course, I would not have accepted the plaintiffs’ submissions that the Court should infer that Colin received a total amount in that earlier period equivalent to the average monthly amount during the later period multiplied by the number of months in the earlier period. There is no rational basis for such an inference, having regard to Dr Hensel’s evidence of the volatility of market prices for granite. To quantify an award based on an inference lacking any rational basis would risk an order for restitution being unjust.

The plaintiffs’ closing submissions made no reference to the claim for a declaration that the Morris Carpenter Partnership is dissolved. In circumstances where it is common ground that the partnership came to an end in August 2003, such a declaration would have no utility. Even if the plaintiffs had not impliedly abandoned the claim for the declaration in closing submissions, I would have declined to exercise the Court’s discretion to make the declaration: Sidameneo (No. 456) Pty Ltd v Alexander (No. 2) [2012] NSWCA 87 at [16]. No declaration will be made.

I now turn to Tastex’s claim for an order for the taking of accounts of the Morris Carpenter Partnership. Tastex submitted that an order for the taking of accounts is a discretionary remedy that must serve a useful purpose. [223] In my opinion that is correct, even where the order is sought in aid of partners’ rights to have partnership property applied in accordance with s 39 of the Partnership Act: Mulherin v Quinn Villages Pty Ltd [2007] QSC 231 at [22]; Wang v Cai [2021] NSWSC 1162 at [358]. That is to say, an order for the taking of accounts must serve some useful purpose in connection with s 39.

The plaintiffs submitted that the purpose of the order sought “is to account for the value of the 2003 Stockpile and the value of the right to quarry”. [224]

I reject the submission that an order for the taking of accounts would serve those purposes.

On the basis of the plaintiffs’ own evidence referred to at [87] and [114]-[124] above, it is not possible to identify the 2003 stockpile as distinct from material that accumulated on Lot 31 and Lot 134 prior to the Morris Carpenter Partnership and during the period of more than a decade after the partnership came to an end. It is therefore not possible to identify the quantity of any saleable material within the 2003 stockpile (if any) or the value of that material as at the end of the Morris Carpenter Partnership. Accordingly, an order for the taking of accounts would not serve the first purpose identified by Tastex.

As to the second stated purpose, the “right to mine or quarry” was not an asset of the Morris Carpenter Partnership at the end of the partnership for the reasons explained at [223]-[227] above.

Those are sufficient reasons to reject Tastex’s claims for an order for the taking of accounts. It is not necessary to determine Central West’s defences of settled accounts and the limitation defence. Had it been necessary to do so, I would have rejected the defence of settled accounts because there has not been a settlement of all accounts, it being common ground that no account was ever taken in respect of the 2003 stockpile. However, I would have held that the claim for the taking of accounts, made some thirteen years after the Morris Carpenter Partnership came to an end, was out of time by reason of s 15 of the Limitation Act 1969 (NSW), either by direct application or applied in equity by analogy. I would have held that there was no fraudulent concealment that defeated the limitation defence by operation of s 55 of the Limitation Act or in equity. The alleged fraudulent concealment related only to the additional monthly payments. Tastex’s recent discovery of those payments during the hearing of these proceedings has nothing to do with its delay in seeking an order for the taking of accounts of the partnership. The existence of a claim for an order for the taking of accounts has not been concealed from Tastex.

I have found that the parties did not enter into the alleged Quarrying Agreement on the terms claimed by the plaintiffs. Rather, they entered into an agreement that the plaintiffs would mine, cut and shape granite in preparation for sale, Colin would use reasonable efforts to sell the first grade granite and would pay the plaintiffs a fee per cubic metre of granite sold, with the amount of the fee to be determined by the plaintiffs and Mrs Huggard at the time of sale. [225]

As referred to at [74] above, the plaintiffs allege that Colin has repudiated that agreement because he is not ready, willing or able to perform his obligation “to sell the 2014 stockpile” due to his lack of legal authority to sell the 2014 stockpile since November 2011 without the permission of Kathryn and Alison (to the extent that the stockpile is located on Lot 31) and Mr and Mrs Dunkley (to the extent that the stockpile is located on Lot 134). The plaintiffs did not contend that Colin requires an authorisation under the Mining Act (as amended) to sell the stockpile.

The plaintiffs have failed to prove the alleged repudiation. Colin’s obligation under the agreement was not to sell the granite, but to use reasonable efforts to sell the first grade granite. The evidence does not establish that he has failed to use reasonable efforts, much less that any such failure amounts to repudiation of the agreement. It is uncontroversial that some sales have been made by Colin and that the plaintiffs have received payment in respect of those sales, with the exception of the two sales made by Colin referred to at [188] above for which the plaintiffs alleged but failed to prove that they did not receive payment. The evidence does not establish whether the lack of further sales is attributable to the state of the market, or Kathryn and Alison’s conduct in selling blocks of granite to customers who might otherwise have purchased from Colin, [226] or a failure on Colin’s part to make reasonable efforts (by marketing the first grade granite and obtaining the permission of the owners of Lot 134 to enter their land in order to remove the granite for sale), or some combination of one or more of these factors. The plaintiffs’ submissions wrongly assume that Colin would have to negotiate to acquire the 2014 stockpile from Kathryn and Alison (as to 50 per cent of the stockpiled material on Lot 31) and Mr and Mrs Dunkley (as to the stockpiled material on Lot 134). [227]

The plaintiffs’ submissions made a passing reference to the exploration licence granted to Marble Craft as putting beyond doubt that Colin did not intend to obtain the legal right to sell the 2014 stockpile. [228] However, the rights granted to Marble Craft under that exploration licence are to explore for specified minerals, including dimension stone. The exploration licence does not authorise Marble Craft to remove and sell any dimension stone from the land. [229] As I have found at [189]-[190] above, Colin has made payments to the plaintiffs in respect sales of granite made in 2016, after the exploration licence was granted to Marble Craft.

The plaintiffs also rely on Colin’s failure to take up two opportunities to sell Grandee Granite to customers with whom the plaintiffs were negotiating in July and August 2019. [230] This is misconceived, as these opportunities arose several years after the plaintiffs say they had already accepted the alleged repudiation by commencing these proceedings. In any event, the plaintiffs’ correspondence informing Colin about the July 2019 opportunity was silent as to price. In those circumstances, Colin’s failure to accept the opportunity cannot be said constitute a failure to use reasonable efforts to sell the first grade material from the 2014 stockpile. The plaintiffs informed Colin that the August 2019 opportunity was for a sale at $508m3, well below the $600m3 that the plaintiffs were seeking to change Colin for extracting the granite from the Grandee Quarry towards the end of 2014. There is no evidence as to whether $508m3 was a reasonable price in the market as at August 2019. An obligation to use reasonable efforts to sell the first grade granite does not require sales at prices below reasonable market prices.

That is sufficient to dispose of the plaintiffs’ claim for damages for repudiation of the alleged Quarrying Agreement. However, even if the plaintiffs had proved that Colin repudiated the agreement that was entered into at some time after September 2003, I would have declined to award any damages in favour of the plaintiffs due to their failure to adduce evidence of:

The plaintiffs’ submissions did not address either of these two matters. The plaintiffs simply presented a damages calculation based on a volume of 4,000m3 (which I have rejected for the reasons explained at [174]-[186] above), and a price of $300 per cubic metre on the basis that this was the rate agreed between the parties for second grade stone (which I have also rejected for the reasons explained at [134]-[166] above) or alternatively $250 per cubic metre on the basis that this was the upper end of the price range that Jimmie asserted was paid to the plaintiffs for second grade stone during the period after the partnership ended (as to which, see [167]-[170] above).

The plaintiffs emphasised that mere difficulty in estimating damages does not relieve a court from the responsibility of estimating them as best it can, even if some guess work may be involved. It was submitted that the Court must do the best it can in the present case with the evidence available. [231] I reject that submission. Whilst mere difficulty in estimating damages does not relieve the Court from the obligation to estimate them as best it can, the Court should decline to estimate damages where the evidence called on behalf of the claimant fails to provide any rational basis for a proper estimate: Troulis v Vamvoukakis [1998] NSWCA 237 (Gleeson CJ, Mason P and Stein JA agreeing); see also Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd (2003) 196 ALR 257; [2003] HCA 10 at [38] (Hayne J). In this case, for the reasons already explained above, the plaintiffs have failed to adduce evidence that provides a rational basis for estimating, even with some degree of guess work, the damages that they claim to have suffered as a result of Colin’s alleged repudiation of the agreement made after the end of the partnership.

For all of those reasons, the plaintiffs’ claim for against Colin for alleged repudiation of the Quarrying Agreement fails.

For the reasons explained at [189]-[190] above, the plaintiffs’ claims against Colin for alleged breach of the Quarrying Agreement in relation to two sales after 2014 fails.

The plaintiffs’ claim against Marble Craft for damages for conversion in relation to the three sales referred to at [191]-[193] also fails in the absence of any suggestion that the plaintiffs had an immediate right to possession of the stockpiled material at the time of the sales in 2016. Bunnings Group Ltd v CHEP Australia Ltd (2011) 82 NSWLR 420; [2011] NSWCA 342 at [129] (Allsop P, Macfarlan and Giles JJA agreeing). The plaintiffs claim only a contractual right as against Colin to payment out of the sale proceeds of stockpiled granite.

The plaintiffs’ claim against Colin for damages for alleged repudiation of the Future Mining Agreement fails because, for the reasons explained at [134]-[166] above, the plaintiffs have failed to prove that they entered into that agreement with Colin.

Even if I had found that the plaintiffs and Colin had entered into the Future Mining Agreement, I would have rejected the plaintiffs’ contention that Colin repudiated that agreement by requiring quarrying activities to cease when he became aware that those activities were unlawful. As a consequence of the amendments to the Mining Act that commenced on 15 November 2010, neither the plaintiffs nor Colin were able to perform their respective obligations under any such agreement. It was in those circumstances that Colin telephoned Jimmie and told him that the “mining licence” had expired and told him to remove Tastex’s equipment and cease quarrying. [232] In my opinion, that would not constitute repudiation by Colin of any Future Mining Agreement (if such an agreement existed). A reasonable person in the plaintiffs’ position would have understood Colin’s communication to be conveying the need for both parties to comply with the law (as amended), rather than renouncing Colin’s obligations under the alleged Future Mining Agreement: Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd (2007) 233 CLR 115; [2007] HCA 61 at [44] (Gleeson CJ, Gummow, Heydon and Crennan JJ). In my view, the circumstances would enliven the doctrine of frustration rather than repudiation. Neither the plaintiffs nor Colin relied on the doctrine of frustration, but that does not make the plaintiffs’ submissions in relation to repudiation more persuasive.

Even if I had found that the plaintiffs and Colin entered into the Future Mining Agreement and that Colin had repudiated that agreement, I would have declined to award damages on the basis that the plaintiffs’ evidence fails to provide any rational basis for a proper estimate of the quantum of damages, even allowing for future-looking nature of the assessment and the requirement for some guesswork: see the authorities referred to at [255] above. The fundamental shortcoming in the plaintiffs’ evidence was that they failed to establish a rational basis for estimating the quantity of dimension stone remaining to be mined at the Grandee Quarry [233] and the extent to which such stone would be of first grade or second grade quality. [234]

For all of the foregoing reasons, each of the plaintiffs’ claims fails and there will be an order dismissing the proceedings. Ordinarily, costs would follow the event and the plaintiffs would be ordered to pay the costs of the first, fourth to seventh and eighth to ninth defendants. I am not presently aware of any reason why such an order should not be made. However, I will allow the parties the opportunity to be heard about costs, including the eighth and ninth defendants who indicated that they would wish to be heard about the costs orders to be made at the conclusion of the proceedings.

The order and directions of the Court are as follows: